MNI BRIEF: No Clear Benefit In Hike To 4% And Pause - Visco

Any benefits of a furtherl rate hike by the European Central Bank bringing the deposit rate to 4% at the next meeting and then announcing a pause could be limited, Bank of Italy’s Governor Ignazio Visco said in an event on Wednesday, noting that the decision should be motivated by upcoming data, inflation expectations and the output gap.

Visco said the risk of overtightening is evident given that the full impact of ECB hikes are yet to be felt in the real economy and no clear messaging came from a pause if rates then had to be moved quickly if fresh economic shocks emerged.

“We are close to the level where (we need) to keep rates”, he said, adding that it will be a continuous challenge.

On the inflation debate, Visco sees a decline in core inflation that will quicken in coming months due to base effects, as has happened with energy prices.